Thousands of Abandoned Oil & Gas Wells Pose Risk to Texas, Show Need for Reform at Railroad Commission

March 2, 2021

As recent power blackouts put focus on state response, new report & organization highlight need for reform as landowners and fend for themselves with abandoned oil and gas sites

 LAREDO, TEXAS — The Railroad Commission of Texas has largely ignored oversight of the thousands of abandoned oil and gas wells across the state and the threats they pose to people and the environment, according to a report from the new nonprofit organization Commission Shift. Two weeks after massive electricity blackouts took Texans’ lives and livelihoods, the Railroad Commission -- which is the state’s oil and gas agency -- joins the list of state agencies facing calls for reform.

Commission Shift, which launches today with its first report and a virtual event, focuses on reforming oil and gas oversight in Texas through accountability at the Railroad Commission.

“Texas needs the Railroad Commission to be a proactive agency, preparing our state for rapid shifts in our climate and economy,” said Virginia Palacios, executive director of Commission Shift. “That preparation includes not only adapting to extreme weather, but also preventing the kind of damage that some oil and gas companies are leaving behind in the wake of rising bankruptcies.”

Texas has a diverse economy, but a significant portion of our state’s revenue has traditionally come from the oil and gas sectors,  making it critical that the Railroad Commission and state leaders look ahead to manage our resources effectively in a way that supports the state budget.

Key Findings from the Unplugged and Abandoned Report:

  • As economic factors like price wars between OPEC nations and the pandemic drive bankruptcies in the oil and gas sectors, thousands of abandoned “orphan wells” are left across the state and become the Railroad Commission’s responsibility.
  • Texas used to have a well-funded program to make sure the state was protected from the cost of plugging abandoned wells and cleaning up sites but the scale of the challenges has outpaced the revenue stream, leaving taxpayers on the hook.
  • As investment moves away from oil and gas companies in favor of businesses with a better return, the state of Texas faces a significant economic threat. Combined with declining demand from depressed commodity prices, shifting consumer preferences and the global COVID-19 pandemic, the state faces a surge in oil and gas company bankruptcies and declining revenue from fees it collects from the industry. Meanwhile, the Railroad Commission of Texas—the state’s oil and gas regulator—has been asleep at the switch.
  • Texas could face a dramatic increase in the number of “orphan” wells—those abandoned by companies that are no longer solvent. As a result, the state faces the prospect of more abandoned wells and rising cleanup costs.
  • The Railroad Commission has had opportunities to confront the transition occurring in the energy business and better prepare for the declining revenue and rising environmental risks it poses. So far, however, it has failed to do so.

"These old, deteriorating and long abandoned wells are like ticking time bombs and are devastating our land, air and water, as the Railroad Commission delays plugging them, repeatedly claiming insufficient funds," said Molly Rooke, whose family ranch in South Texas suffered an abandoned well blowout in 2019. "It's time for the Railroad Commission to increase funding from the oil and gas industry and its oversight for the good of all Texans."

Key Policy Recommendations from Commission Shift:

  • The Railroad Commission should review and make improvements to financial assurance requirements and processes, including bonding requirements for oil and gas well operators.
  • The agency should also review and potentially increase fees and surcharges that create a revenue stream for the Oil and Gas Regulation and Cleanup Fund.
  • The Railroad Commission should also consider changes to the process for tracking operators with inactive wells, holding them accountable to plugging their wells before they go bankrupt.

“On the heels of a series of massive power outages across Texas, it is critical to hold the Railroad Commission accountable for exercising the needed foresight to anticipate Texas’ changing energy needs and implementing rules that won’t leave Texans in the dark,” said Steve Brown, a Commission Shift board member, clean energy development professional and former Railroad Commissioner candidate.

The effects of climate change are also catching up to us, from more intense hurricanes to drought and wildfires. Polling shows that the vast majority of Texans are worried about climate change, and most support government interventions to manage carbon.

“Commission Shift believes the Railroad Commission should lead Texas into a new energy landscape that benefits the climate while prioritizing public health, transparency and public engagement, consumer protection, transparency and public engagement, a clean environment, an empowered workforce, and a diverse and resilient economy,” said Palacios, a ninth-generation Tejana from Webb County.

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Contact: Oliver Bernstein, oliver@steadyhandPR.com, 512.289.8618

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